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City changes code to help with loans

Springfield banker favors reduced restrictions.

A change to city code will allow residents to rebuild non-conforming structures if they’re destroyed and ease the process of selling and refinancing these types of buildings.

According to a section of the city’s previous non-conforming code, a structure that is non-conforming and that is destroyed by fire, act of God or public enemy to 100 percent of its value then must be rebuilt in a conforming status.

City commissioners voted unanimously this month to amend the non-forming code to remove this section.

“It was preventing people from refinancing or getting new loans on property,” said Bryan Heck, the city’s planning and zoning administrator.

For example, if a four-unit structure in an RS-8 zoning classification — which only allows two-unit structures — is destroyed, an owner would have to rebuild it in conforming status.

Heck said what prompted the change was banks tightening the process on home and home refinancing loans. Heck said the problem arose from residents, property owners, banks and loan officers.

“That provision of the code a lot of times was preventing people from refinancing or selling their home,” Heck said. “If you owned a four-unit and you were trying to sell that structure, most likely the bank was not going to issue a loan to a buyer because if it was destroyed … it couldn’t be rebuilt. The mortgage company didn’t want to make that loan because they didn’t want that risk associated with it being destroyed.”

Heck said they’ve had positive feedback from these owners who are looking to either sell or refinance their properties.

“They’re already starting the process of selling or refinancing,” Heck said.

Jason Bucey, the assistant vice president of New Carlisle Federal Savings Bank in Springfield, said in his experience, the scenario is rare. However, anything that reduces restrictions will open the market and make it easier for lending.

“It makes it easier to get a loan, and the value will increase because you have more buyers,” Bucey said. “Anything like that is absolutely going to help.”

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